In a speech to the Committee for Economic Development of Australia exactly two months out from budget night, Chalmers used a cautionary tone to say there’ll be no repeat of the surging revenue from high resource prices that drove last year’s record surplus.
He did, however, say new cost of living support would be on the table, albeit in a more subdued policy than the revamp of the stage 3 tax cuts announced in January to come into effect in July.
“There will likely be additional cost of living help in the budget but it won’t be anywhere near the magnitude of the tax cuts,” Chalmers said.
“We are already providing a tax cut to every taxpayer, and a bigger tax cut to more workers, we need to be upfront and say that any additional help will only be a fraction of that.
“Any extra help will be targeted, responsible and affordable.
“There will not be big cash splashes in the budget, simple as that. We believe budgets should be shaped by the economic cycle, not the electoral cycle.”
Chalmers said while the government was mindful of people still struggling with the cost of living, pouring too much money into financial relief for households would add to inflation.
“We don’t see cost of living help as stimulus – at least not in the way we thought of it in the GFC or the pandemic – we see it as a way of taking the pressure off inflation not adding to it,” he said.
“Anything that’s too costly, too splashy, risks undoing the good progress we’ve made together on inflation.”
The federal budget will be handed down on May 14. And while the government banked a $22 billion surplus last year – the first since 2007-08 and the largest on record – Chalmers cautioned there would not be a repeat this time around.
“The revenue upgrades will be smaller,” he said.
“In each of our first two budgets we benefited from more than $100 billion in revenue upgrades.
“This year, we won’t see anything like that. In fact, we are even looking at much less than the $69 billion we booked in the latest mid‑year budget update.”
He said that was down to falling iron ore prices, steady coal prices, and the softening jobs market, adding that would force the government to bank “a substantial amount of the upward revision, but not all of it – in all likelihood not as much as we did in the first two budgets”.
